• European bourses are subdued after a modestly positive start; FTSE 100 & energy names after Shell cut quarterly dividend
• US President Trump said China will do anything they can for him to lose the 2020 election and stated the US is looking at different options regarding consequences for China
• Chinese official Manufacturing and Caixin Manufacturing PMIs fell short of estimates but Non-Manufacturing and Composite PMIs both improved
• US President Trump said they will have a plan to support oil companies soon while IEA’s Birol warned storage could be full by mid-June
• FX sees the USD softer with GBP the main beneficiary on both technical and month-end demand
• Looking ahead, highlights ECB policy announcement & press conference, US initial jobless claims, Canadian GDP, Chicago PMI

CORONAVIRUS UPDATE

US Treasury Secretary Mnuchin said Federal Reserve programmes should be broad based and not industry-focused, while he added there are no plans for additional money for airlines at this time. (Newswires)

UK PM Johnson is to dash hopes that the lockdown could be lifted soon and will warn the country today not to expect major changes to restrictions as UK risks having among the world's worst death rates. (Telegraph) Note, the next scheduled review for the lockdown is on May 7th. However, a separate article in the Telegraph notes that a blueprint for ending the lockdown could be unveiled as soon as Monday. UK COVID-19 death toll rose to 26,097 in which deaths increased by 765 (578 hospital vs. yesterday’s 586). (Newswires)

AstraZeneca (AZN LN) – Co. and Oxford Uni announce landmark agreement for a COVID-19 vaccine, aims to secure CHADOX1 vaccine potential to patients. Co. would, under this agreement, be responsible for the worldwide manufacturing and distribution. CEO says the Co. should have a good idea in June or July whether its COVID-19 vaccine works; any vaccine would be provided at cost. (Newswires)

German Chancellor Merkel's Chief of Staff says social distancing measures will "certainly" be extended until 10th May, via Bild Newspaper. German Public Health Ministry estimates the R0 for COVID-19 in Germany at 0.76.

Italian PM Conte says the government will work with regions so that they can ease coronavirus restrictions, depending on local conditions. (Newswires)

Spain's coronavirus deaths rise by 268 to 24,543 (Prev. 24,275), according to the Health Ministry.

Tokyo has 46 new cases of COVID-19, according to media reports. (Newswires) Japan's PM has reportedly decided to extend the deadline, originally May 6th, for deciding upon an extension to the deceleration of emergency, Kyodo. Japanese gov't is to create a fund with up to JPY 1tln set aside for capital injections for SMEs, Nikkei reports

ASIA

Asian equity markets traded positively as the region took impetus from the gains on Wall St where sentiment was underpinned by coronavirus treatment hopes after preliminary results from Gilead’s Remdesivir drug trial showed a 31% faster recovery time and lower mortality rate compared to patients that were given a placebo. Furthermore, the Fed reiterated to keep supporting the economy as necessary and encouraging earnings from several tech heavyweights after-market briefly added fuel to the momentum for US index futures. ASX 200 (+2.4%) was lifted by strength in the energy sector as oil prices continued to make up ground and with a slew of corporate updates in focus. Nikkei 225 (+2.1%) outperformed as it played catch up on return from the holiday closure and as a weaker currency provided an uplift to exporter sentiment, while Industrial Production and Retail Sales data were not as bad as had been feared despite both printing in contraction territory. Shanghai Comp. (+1.3%) was also positive ahead of the extended 5-day weekend in the mainland for Labor Day holidays and amid several blue chip earnings, although gains were somewhat capped by the absence of Hong Kong participants and following mixed Chinese PMI data in which official Manufacturing and Caixin Manufacturing PMIs fell short of estimates but Non-Manufacturing and Composite PMIs both improved. Finally, 10yr JGBs were lacklustre with demand subdued by gains in riskier assets and following a similar uninspired tone in T-notes, while the absence of the BoJ in the market today and resistance ahead of the 153.00 level also ensured the mundane price action.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0571 vs. Exp. 7.0618 (Prev. 7.0707) PBoC will reportedly offer long term funding through RRR and MLF next month, according to Chinese press.

US President Trump said China will do anything they can for him to lose the 2020 election and stated the US is looking at different options regarding consequences for China for its handling of coronavirus crisis in which he suggested he could do a lot. Furthermore, US President Trump stated the US trade deal with China has been upset very badly by coronavirus, while he doesn't see elections as a referendum of his handling of the crisis and doesn't believe polls showing Biden is ahead. (Newswires)

Chinese Manufacturing PMI (Apr) 50.8 vs. Exp. 51.0 (Prev. 52.0). Chinese Non-Manufacturing PMI (Apr) 53.2 vs. Exp. 52.5 (Prev. 52.3) Chinese Composite PMI (Apr) 53.4 (Prev. 53.0) Chinese Caixin Manufacturing PMI (Apr) 49.4 vs. Exp. 50.3 (Prev. 50.1); Export Orders fell by the fastest pace since the GFC and employment declined further.

Japanese Industrial Production (Mar) M/M -3.7% vs. Exp. -5.2% (Prev. -0.3%). (Newswires) Japanese Industrial Production (Mar) Y/Y -5.2% vs. Exp. -7.4% (Prev. 5.7%)

US

US NEC Director Kudlow stated the economic contraction is going to go on for a bit although he predicts a growing and recovering economy by summertime. (Newswires)

UK/EU

EU GDP Flash Prelim QQ (Q1) -3.8% vs. Exp. -3.5% (Prev. 0.1%)

-        EU GDP Flash Prelim YY (Q1) -3.3% vs. Exp. -3.1% (Prev. 1.0%)

EU HICP Flash YY (Apr) 0.4% vs. Exp. 0.1% (Prev. 0.7%)

-        EU HICP-X Food & Energy Flash YY (Apr) 1.1% vs. Exp. 0.8% (Prev. 1.2%)

-        EU HICP-X Food, Energy, Alcohol & Tobacco Flash YY (Apr) 0.9% vs. Exp. 0.7% (Prev. 1.0%)

EQUITIES

European equities waned off highs since the cash open (Euro Stoxx 50 -0.2%) and failed to sustain the momentum from a positive APAC handover, as markets digest a slew of earnings and sets sights on the ECB’s policy announcement later (Full preview available on the Research Suite). Overall, bourses trade mixed with mild outperformance in the CAC 40 (+0.1%) – aided by the likes of Safran (+1.7%) post-earnings and Airbus (+5.4%) as shares are underpinned after its CEO noted the group is in talks with French states – yesterday Finance Minister Le Maire said the gov’t could aid Airbus if the time is right. Sectors remain mixed and do not reflect a clear risk tone. Energy is the clear laggard as Shell (-6.3%) plumbs the depths post-earnings, afflicting the FTSE 100, after the group cut dividends for the first time since 1945 amid the oil price slump. The sector breakdown is similarly diverse but sees Travel & Leisure as the top amid hopes of looser global lockdown measures. Individual movers again largely consist of post-earning action; Lloyds (-5.9%) remains pressured after reporting a slump in Q1 pre-tax profit alongside a rise in impairments of around GBP 1.2bln YY. BASF (-1.0%) is lower after missing on Adj, EBITDA expectations, and cutting Q1 EPS to EUR 0.96/shr from EUR 1.53/shr whilst withdrawing guidance. Orange (+1.1%) holds onto opening gains as the group does not expect to significantly deviate from its FY targets. BBVA (-1.5%) holds onto losses after reporting an impairment charge of over EUR 2bln. Other earnings-related movers include Swiss Re (-2.5%), Deutsche Boerse (+2.6%), Nokia (+3.7%) and Danske Bank (-1.8%)  Elsewhere, Wirecard (+4.8%) rises as its chairman does not see CEO Braun behind replaced, which follows activist Hohn’s call to remove the CEO. Finally, AstraZeneca (+3.3%) sees upside after the Co. and Oxford Uni announce landmark agreement for a COVID-19 vaccine, aims to secure CHADOX1 vaccine potential to patients. Co. would, under this agreement, be responsible for the worldwide manufacturing and distribution – with the CEO stating it should have a good idea in June or July whether its COVID-19 vaccine works.

Facebook Inc (FB) - Q1 20 (USD): EPS 1.71 (exp. 1.75), Revenue 17.7bln (exp. 17.53bln). Advertising revenue: 17.44bln (exp. 17.37bln). Daily active users (DAUs): 1.73bln (exp. 1.69bln). Monthly active users (MAUs): 2.6bln (exp. 2.56bln). Co. said it experienced a reduction in demand for advertising in the last three weeks of Q1, but after that steep decrease, it has seen signs of stability in the first three weeks of April. (Newswires) Co. shares rose 10.5% after-market.

Microsoft (MSFT) - Q3 2020 (USD): EPS 1.40 (exp. 1.26); Revenue 35bln (exp. 33.66bln). Intelligent cloud: 12.3bln (exp. 11.87bln). More personal computing: 11.0bln (exp. 10.54bln). Productivity and business process: 11.7bln (exp. 11.64bln). Server Products & Cloud Services Revenue +30% driven by Azure revenue growth of 59%. Co says in the final weeks of the quarter there was a slowdown in transactional lending and particularly in small and medium sized businesses. (Newswires) Co. shares rose 2.2% after-market.

Tesla Inc (TSLA) - Q1 20 (USD): Diluted EPS 0.06, adj. 1.24 (exp. -0.23), Revenue 5.99bln (exp. 5.99bln). Says it will revisit 2020 guidance in Q2, on hold for now. (Newswires) Co. shares rose 8.8% after-market.

Shell (RDSA LN) – Q1 adj. profit USD 2.86bln vs. Exp. USD 2.29bln, decided to cut quarterly dividend to USD 0.16/shr. Oil & Gas output totalled 4.72mln BPD. CCS earnings USD 2.756bln vs. Prev. USD 5.293bln, of which. Shareholder attributable loss of USD 24mln. Not continuing with next tranche of share buyback. (Newswires)

FX

USD - The Dollar is holding up relatively well in wake of the FOMC and presser from Fed Chair Powell that was forthright in terms of appraising the sever economic impact of the coronavirus containment efforts and the high probability that even more stimulus will be required, monetary and fiscal, to try and ensure a robust post-pandemic recovery. Moreover, the Greenback remains prone to further month-end outflows for rebalancing purposes and erosion of safe-haven premium given buoyant risk sentiment based on hopes for an anti-COVID-19 treatment and/or vaccine. However, the DXY is managing to stay within proximity of the 99.500 level that has been pivotal within recent ranges and is still keeping the index resistant on approach towards 99.000

CHF/GBP - The major “outperformers”, albeit amidst quite restrained parameters overall, as the Franc inches closer to 0.9700 and further away from 1.0600 vs. the Euro, while Cable rebounds towards 1.2500 and Eur/Gbp recoils towards 0.8700 on a mix of month end demand and technical factors. Note, one bank model is pointing to outsize Sterling demand vs. the Buck and especially from 1500BST to 1600BST when fund managers re-hedge stock portfolios, while the cross is back below the 200DMA again.

CAD/EUR - Another upturn in oil prices has helped the Loonie consolidate gains above 1.3900 and almost match the current mtd peak not far from 1.3850 ahead of Canadian data comprising monthly GDP and PPI, while the Euro is still meeting resistance ahead of 1.0900 and last week’s apex just shy of the round number, though also finding underlying bids on dips despite more downbeat Eurozone data in the run-up to ECB

JPY - The Yen also looks locked between decent option expiries and a key chart level that was marginally breached on Wednesday, while many Japanese participants were otherwise engaged given a market holiday on the penultimate trading session of April, but did not trigger stops to test 106.00. Subsequently, Usd/Jpy is meandering between 106.87-42 and back above the aforementioned technical mark (50% Fib retracement at 106.45)

AUD/NZD - Aud lost impetus around 100 DMA at 0.6567, and mega 2.7 bn expiry at 0.6570. Nzd hampered by bleak NBNZ Biz survey.

New Zealand ANZ Business Confidence (Apr) -66.6% (Prev. -63.5%). (Newswires) New Zealand ANZ Activity Outlook (Apr) -55.1% (Prev. -26.7%)

S&P cut South Africa by one notch to BB-; Outlook Stable. (Newswires)

FIXED

Core bonds maintain upside momentum into month end with new highs posted above prior resistance levels and April peaks awaiting the ECB for potential fresh direction. Italian BTPs look especially expectant and in need of a revival but may be disappointed in the event. Also ahead, US data including the next instalment of weekly claims and Chicago PMIs as a precursor to ISM on Friday.

COMMODITIES

Energy contracts wane off best levels as European trades goes underway, but nonetheless remain firmly in positive territory, with WTI June +14% just above USD 17/bbl (intraday range USD 15.45-17.75/bbl) while the Brent July contract sees gains of around 8%, with prices just north of USD 26/bbl (intraday range USD 24.41-26.66.bbl). In terms of fresh developments, Norway Oil Ministry said Norway will be cutting oil output by 250k BOE/D in June and then lowered to 134k BPD in H2 until year-end, while the start-up of production at several fields will be delayed until 2021 and that production in December 2020 will be 300k BPD less than originally planned. Meanwhile, over in the US, Texas regulators released details on a proposed order to cut Texan output by around 1mln BPD, with a potential vote next week. Albeit, Texas Railroad Commission Chairman Christian said he still opposes mandated oil production cuts to address global oil curb. Elsewhere, US President Trump said they will have a plan to support oil companies soon. Other reports also noted the Trump administration is close to rolling out new lending facilities to help oil and gas companies struggling from a collapse in prices. Amongst all this, IEA’s Chief Birol warned that global storage could be full by mid-June and called on OPEC+ to mull further cuts, with the initial pact set to officially come into effect tomorrow. Elsewhere, spot gold sees modest gains as equities pull back from highs, with the yellow metal towards the top of its daily band of USD 1709.79-1719.66/oz. Base metals focus on lower mining output and the prospect of economies reopening for business, with Copper prices firmer on the day, albeit off highs, as the red metal meanders around mid-range at USD 2.4/lb and Zinc rallying some 2% in overnight trade.

IEA's Birol warned that global oil storage could be full by mid-June and called on OPEC+ countries to consider more cuts. (Twitter)

US President Trump said they will have a plan to support oil companies soon. Other reports also noted the Trump administration is close to rolling out new lending facilities to help oil and gas companies struggling from a collapse in prices. The program which is still under development, would primarily consist of the US Treasury Department offering bridge loans to help the industry through this pandemic and the Federal Reserve offering emergency lending under the so-called Section 13(3) program, while US Energy Secretary Dan Brouillette stated the lending facilities were not meant for "big players" in the sector that have other sources of capital. (Newswires/Argus) US Treasury Secretary Mnuchin that the administration is looking at a lot of strategies for the energy industry but rules out a bailout for oil companies, while Mnuchin added the administration is exploring having the ability to store another several hundred million barrels of oil. (Newswires)

Texas Railroad Commission Chairman Christian said he still opposes mandated oil production cuts to address global oil curbs and noted that state producers are cutting output although a 20% reduction in Texas will not impact global supplies. (Newswires)

Norway Oil Ministry said Norway will be cutting oil output by 250k BOE/D in June and 134k in H2, while the startup of production at several fields will be delayed until 2021 and that production in December 2020 will be 300k BPD less than originally planned. (Newswires) Norwegian gov't has proposed measures to stimulate investments by the energy industry - will propose significant tax measures to secure oil industry activity.